An Increase in the Minimum Wage Won’t Benefit Everyone Equally, New Research

An Increase in the Minimum Wage Won’t Benefit Everyone Equally, New Research

An increase in the federal minimum wage will disproportionately benefit hourly paid workers who are young, female, nonwhite, never married, and less educated, according to new research from the Carsey Institute at UNH.

The new research is presented in the Carsey Institute policy brief “Who Would Be Affected By a New Minimum Wage Policy?” The research was conducted by Jessica Carson, a vulnerable families research scientist at the Carsey Institute.

In his 2013 State of the Union address, President Barack Obama proposed increasing the federal minimum wage from $7.25 to $9 per hour. Two legislative bills proposing to raise the minimum wage to $10.10 per hour are currently in review by congressional committees.

“Because it is unclear whether the proposed legislation will pass in its current incarnation, this brief describes the population who would be directly affected by the president’s proposal: workers earning between $7.25 and $9 per hour,” Carson said. “Although some research finds that increasing the minimum wage could effectively reduce poverty and increase family income, other research suggests that an increase in the minimum wage could result in the loss of low-wage jobs, or that the wage increase would largely benefit nonpoor families.”

Carson found:

Nearly 17 percent of hourly paid workers earn between $7.25 and $9 per hour and would see a pay increase under the proposed minimum wage policy.

The increase would disproportionately benefit women, who constitute about one-half of the hourly workforce but 59.4 percent of workers earning between $7.25 and $9 per hour (“affected earners”) and a full two-thirds of affected earners in rural places.

A new policy would disproportionately affect the less educated. While only 11 percent of the hourly workforce lacks a high school diploma, this is true for 25 percent of affected earners in urban places and 19 percent of those in rural places.

Half of all affected earners are either the householder or the spouse of the householder; the other half are offspring of the householder over 18 (25 percent), children under 19 (5 percent), and other related or unrelated household members (20 percent). Nearly three in 10 affected earners (29.7 percent) are the sole earner in their family.

About seven in 10 affected earners would see their weekly earnings rise by 10 percent or more, with weekly pay rising an average of 14.9 percent (or about $45) in rural places and 13.5 percent in urban places (about $42 weekly).

“Given the current focus on the federal deficit and the limited resources available for direct federal investment in low-income families, raising the minimum wage is one way that Congress might promote stability for those at the bottom end of the wage scale, without relying on federal funds or facing a choice between cutting other programs and increasing the deficit,” Carson said. “Having an understanding of who these workers are – disproportionately young, female, nonwhite, never married, and less educated – and how their wages fit into the broader context of their families’ lives can help to inform these policy decisions.”

This research is based on U.S. Census Bureau estimates from the 2010 and 2012 Annual Social and Economic Supplement (ASEC) of the Current Population Survey.